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Market Review 12 April 2017

Crude Oil Market ReviewThe international crude oil prices took an uptrend on the whole this week. A series of positive news pushed the crude oil price higher. The United States launched a military strike Thursday on a Syrian government airbase, arousing players’ anxieties about supply outage. Later Saudi Arabia declared to extend the production reduction agreement. The U.S. Oil stocks reduced. All these pushed higher the crude oil prices. However, the further growing crude oil production and high stocks in Cushing area made the crude oil price surrender some increases.

Ethylene Market ReviewThe Asian ethylene prices moved upward as a whole this week. As of April 12, closing prices rose by $30/mt to $1,169.5-1,171.5/mt CFR NEA, and closing prices rose by $115/mt to $1,049.5-1,051.5/mt CFR SEA. The Asian ethylene supply may be tight in April due to the maintenance at some naphtha cracking units in Asia. Meanwhile, the buying interests of some ethylene end users increased. Thus the ethylene price is expected to increase, but the growth will be limited by the shrinking downstream styrene profits and the coming sources from Middle East.China Polyethylene Market ReviewThe Chinese PE prices were mixed this week. Early in the week, the LLDPE futures ran at lows, depressing the market trading atmosphere, then some traders lowered the PE offers. While some HDPE offers inched up, supported by the increases in petrochemical companies. Then the ex-works prices edged down as the PE futures prices declined. As of April 13, mainstream LLDPE offers were RMB 9,250-9,750/mt. The LDPE offers were RMB 10,850- 11,350/mt. Most HDPE offers rose by RMB 100-150/mt, except for raffia offers, which rose notably by RMB 300-700/mtChine PE Market ForecastSupply: In the next week, the 60kt/a old FDPE unit at PetroChina Lanzhou Petrochemical keeps in maintenance. The 140kt/a LDPE unit at Sinopec Qilu Company keeps in maintenance in April due to the compressor failure. The MTO unit at Sinopec Zhongyuan Petrochemical keeps in maintenance. The 1PE unit and 4PE unit at Sinopec Shanghai Petrochemical have been shut down, and the 2PE unit is planned to be shut in the middle of April. The 300kt/a HDPE unit at PetroChina Jinlin Petrochemical will be overhauled for about 7 days from April 13. The 300kt/a LLDPE unit at Sinopec-SK (Wuhan) Petrochemical is planned to be overhauled for 7 to 10 days from April 7. The China National Coal Group Yulin Energy and Shenhua Xinjiang Energy also have maintenance plans in H2 of April. The expect decrease in supply will be 16kt. The PE import volume in April is expected to drop by 10%-15% from that in March.

Demand: In terms of the agricultural film, the operating rates at mulch film factories gradually decrease in line with the declined mulch film demand. The mulch factories purchased the raw materials based on the need. To sum up, the upstream crude oil prices were stable-to-rising, supporting the downstream industries. In terms of the spot PE market, the supply decreases amid the maintenance will be less. The inventory level at Petrochemical companies, the ports and in the market decreased somewhat but still high. The downstream users purchased based on the needs, so their inventory was kept to be used in short-term. The petrochemical companies were under the sales pressure, so they lowered the ex-works prices for promotion, followed by the mainstream traders. The LDPE and HDPE prices will go sideways next week, and the LLDPE prices will remain weak.

China Styrene Market ReviewEast China: The styrene market prices in Jiangsu moved within the range of RMB 9,550-9,800/mt this week. The styrene stocks at the main ports of East China remained high. A certain amount of cargoes will arrive next week. The operating rates of downstream industries were impacted by the environmental protection inspection. However, the benzene market bottomed out. The price level RMB9,500-9,550/mt had dropped to styrene producers’ cost line. Positive and negative factors co-existed in the styrene market. Players slowed down the trading pace, waiting for fresh indications

South China: The South China styrene market went higher this week. The reduced spot supply and the constant decrease of styrene stocks at ports provided support for the styrene market. Suppliers were reluctant to sell at lows. The SBS unit at Sinopec Maoming Company was shut down unexpectedly. The styrene supply was also impacted. As a result, the styrene market in South China gained ground. Downstream users showed stronger buying appetites.China SM Market ForecastThe high stock level at the main ports of East China is expected to continue last week. The environmental protection inspection on downstream industries will weigh heavily on the demand for styrene. It’s not clear how long it will last. However, the production cost of Chinese styrene producers averaged RMB 9,500/mt or so. Once the environmental protection inspection comes to an end, the downstream demand may see notable growth. The styrene market will probably see small ups and downs in the short term.Expandable Polystyrene market ReviewThe styrene price moved up after an early drop within this week. The downstream large-scale procurements were sparse. The EPS offers dropped accordingly. Most end users mainly consumed inventories or purchased on a need-to basis. On Wednesday, the styrene price increased and uplifted the EPS price slightly. The price spread between the flame retardant material and general material enlarged to RMB 200/mt.

Polystyrene market ReviewChinese PS market prices fluctuated marginally this week. On Monday, mainstream PS market prices edged down, due to low styrene values and tough PS sales. From Tuesday, styrene values rebounded, and some PS offers tentatively inched down. However, unclear styrene trend and cautious sentiments of PS downstream users weighed on the market somewhat.By Thursday, the offer for general-purpose GPPS was RMB 10,800/mt, down 0.92% from last week. The price for HIPS was at RMB 12,100/mt, unchanged from last week.ABS Market ReviewThe Chinese ABS prices fluctuated slightly this week. The styrene prices rebounded before the Tomb-sweeping Day holiday, easing the bearish market sentiments somewhat. Early in the month, the trading atmosphere improved. ABS producers kept strong mentality on the ABS prices. Some medium and small-sized downstream factories stocked up based on the needs. On April 13, the Chinese-made ABS materials prices were in the range of RMB 14,600-15,300/mt.China Inland Market ReviewIn the Chinese inland areas, the methanol prices rose sharply in some regions this week.In Northwest China, the methanol producers raised offers on low inventories, and the sales were fairish. In central Shaanxi, the prices rose slightly. Some methanol units are going to take overhauls, while the downstream demand is weak. The players are paying attention to the prices changes in the surrounding markets. In Shandong, the market underperformed amid bearish sentiment.Although the supply was tight, limited demand dragged down the trading. Some methanol producers suffered pressure to sell.In Henan, the methanol producers mainly arranged production for former contracts. Considering the feedstock cost, the traders provided limited discounts. In Hebei, local methanol prices moved up, following the uptrend in surrounding markets. However, the demand was curbed by the environmental protection inspection, the negotiation atmosphere weakened later this week. Up to April 13, the weekly average price was RMB 2,594/mt in Shandong and RMB 2,372/mt in Inner Mongolia, up 2.43% and 3.41% respectively from last week.

Chinese Coastal Methanol Market ReviewIn the Chinese coastal areas, the spot prices of methanol kept slipping this week. The prices of methanol futures dominant contract 1709 continued a downtrend, and the daily decline once reached RMB 82/mt. Influenced by this, the methanol suppliers were active in profit-taking and reduced offers repeatedly. However, the buyers were cautious about operation, and the mainstream negotiation prices were dropping continuously. Meanwhile, the supply of inland resources from Southwest China was sufficient. Most players held bearish sentiments.Chinese Methanol Inventory at PortsThe arrival volume of imported methanol was about 65kt this week.It is estimated that about 95-100kt of imported methanol will arrive from April 14 to April 23, including 30-34kt in Jiangsu, 35-40kt in Zhejiang and 30-40kt in South China. Additionally, some cargoes from Southwest China will arrive in East China in H2 April, while the resources from Tianjin will decrease somewhat.International Methanol Market ReviewThis week the trading of imported methanol was insipid.Earlier this week, April loading non-Iranian cargoes were offered at $305-315/mt. April arrival cargoes were offered at a premium of 2%-2.5% on a formula basis, but counter offers were scarce. Later this week, the offers for May arrival non-Iranian cargoes were $305-315/mt or a premium of 2.5%-3%. A few counter offers were heard at $293- 295/mt. Most traders resisted Iranian cargoes due to the high purchase cost, so recent Iranian cargoes were mainly supplied for long-term contracts. A few non-Iranian cargoes from Middle East were transacted at a premium of 2.5% later this week.

China Methanol Market ForecastIn the inland areas, recent environmental protection inspection has influenced the end and downstream demand greatly. Meanwhile, the methanol supply is expected to increase, as some stopped units are scheduled to restart. With the supply and demand getting imbalanced, the market sentiment turns to be bearish. It is predicted that the inland methanol market will fall back next week, and the prices may be in the range of RMB 2,280-2,320/mt in Inner Mongolia and RMB 2,450-2,550/mt in Shandong.In the coastal areas, although the traders try hard to stabilize the market, frequent sharp declines in futures prices and weak downstream purchasing drags down the market. The methanol market in the coastal areas will remain in the downtrend in the near term, and the prices may fluctuate in the range of RMB 2,600- 2,700/mt next week.